FTSE close: EU fear; Home Retail woe

By Ed Monk for Thisismoney.co.uk
Updated: 12:16 EDT, 10 March 2011

17.10 (close)

World stocks took a hammering today as disappointing US jobs data and European sovereign debt fears sparked a wave of panic selling.

The FTSE 100 Index dropped 1.5% - down 92 points to 5845.3 - with heavy falls also seen across Europe and America.

The Dow Jones Industrial Average plunged 160 points in early session trading following US Labor department figures showing unemployment claims rose by 26,000 to 397,000 last week, far above analyst forecasts of a rise of 7,000.

Concerns over the implications of Spain's debt being downgraded hit European markets, with France's Cac 40 down 0.8% and the Dax in Germany off 1% after Moody's reduced its rating for Spain by one notch to Aa2 and warned that a further downgrade could be in the offing in the future.

The pound dropped against most major currencies, including a weaker euro, after UK interest rates were kept on hold once more, maintained at the emergency low of 0.5% despite soaring inflation.

Sterling fell to 1.61 dollars and 1.16 euros.

Spain's rating woes hit banking stocks, with Barclays, which is heavily exposed to the Iberian peninsula, down 4.1p at 301.4p and Royal Bank of Scotland dropping 1p to 43p.

Unexpected disappointment from China's latest trade and export figures hit metal prices and left miners deep in the red. Fresnillo led the sector's declines, off 76p to 1513p.

Traders' gaze drifted from the ongoing concerns over the Libyan crisis as oil prices eased. Brent crude in London dropped more than 1% to 114.5 US dollars a barrel, while US crude for April delivery declined nearly 2% to 102.37 US dollars.

In London, investors were also shaken by a profits warning from Home Retail Group after the Argos owner admitted trading conditions were "more difficult and volatile" than it had expected. Shares in the FTSE 250 group fell 6% or 12.4p to 198.5p.

Other retailers suffered in the top flight, with B&Q owner Kingfisher down 4.6p at 240p and Marks & Spencer off 0.9p at 340p.

Life and pensions firm Standard Life was a heavy faller despite posting a 7% hike in 2010 profits and confirming UK sales up "strongly" in the first two months of 2011 so far. Shares were down 17.8p at 226.9p.

Supermarket Morrisons was enjoying a better session, up 2% or 4.5p to 285p, after it revealed long-awaited plans to launch an online shopping operation and posted a 13% increase in annual profits.

There was also good news from the pub sector after Chef & Brewer owner Punch Taverns reported a bigger-than-expected rise in second quarter sales. Shares were 4.5p higher at 75.5p, a gain of 6%.

This helped FTSE 250 rival Enterprise Inns rise 1%, up 0.7p to 89.3p, with JD Wetherspoon also 9.1p higher at 430.9p ahead of figures tomorrow.

The biggest Footsie risers were Shire up 29p to 1796p, Morrisons ahead 4.5p to 285p, Sage Group up 1.7p to 272.1p and Smith & Nephew up 3.5p to 718.5p.

The biggest Footsie fallers were Arm Holdings down 51.5p to 522.5p, Standard Life off 17.8p to 226.9p, Aggreko down 99p to 1390p and Fresnillo down 76p to 1513p.

15.30: On Wall Street the Dow Jones has plunged 208.62 points and is within a whisker of falling back below 12,000.

That hasn't help shares in London. The Footsie is 99.69 points lower at 5837.61.

14.15:

No sign of relief for shares today, with the FTSE 100 now 70.4 points lower at 5866.89.

Commodity firms are among the heaviest hit today an unexpected disappointment from China's latest trade and export figures hit metal prices.

Carin Energy, 16.9p - 3.8% - down at 423.10p, Rio Tinto, 154p lower at 3,934p and Fresnillo, 66p down at 1,523p, are all suffering.

Life and pensions firm Standard Life was another heavy faller despite posting a 7% hike in 2010 profits and confirming UK sales up 'strongly' in the first two months of 2011 so far.

Investors exited the stock, with one analyst criticising the insurer's 'lack of strategic moves'. Standard Life is 13.1p - 5.3% - lower at 231.6p.

12.35:

We have more on the profit alert from Argos owner Home Retail Group, which has sent the shares down 14.2p to 196.7p.

The retailer said there were 'clear signs' shoppers were under pressure and it was now planning with 'increased caution' for the year ahead.

The FTSE 100 is down 65.5 points at 5,871.8.

12.05:

Interest rates have been kept on hold. It is now two full years since rates hit 0.5%.

There's more on the decision here.

Meanwhile, the Footsie is 62.78 points lower at 5874.52.

11.05:

Tough day so far, with 79 of the 100 blue chips under water.

Overall, the FTSE 100 is 59.14 points lower at 5878.16.

And there looks to be little encouragement coming from the US later, where the futures markets have predicted a 52 point fall for the Dow Jones.

09.45:

The FTSE 100 dropped after a downgrade for Spain added to fears for EU economies, while investors waited on a rates decision and digested an unexpected profits warning for Home Retail.

The Footsie plunged 51.77 points to 5885.53 in early trading.

In a further warning to UK bank investors over the threat of Europe's debt crisis, Moody's reduced its rating on Spain by one notch to Aa2 and warned that a further downgrade could be in the offing in the future.

Sentiment had already been shredded by fighting in Libya which saw Brent crude oil creep higher again to $115 a barrel.

If that wasn't enough, what's expected to be a close interest rate decision at noon put further uncertainty over markets.

A larger-than-expected contraction in Japan's economy had earlier spooked Asian markets, while in the UK investors were shaken by a profits warning from Home Retail Group after the Argos owner admitted trading conditions were 'more difficult and volatile' than it had expected. Shares fell 8% or 16.8p to 194.2p.

Other retailers were under pressure, with B&Q owner Kingfisher down 4.55p at 240.05p and Marks & Spencer off 5.4p at 335.5p.

Morrisons posted a 13% increase in underlying pre-tax profits of £869m in the year to January 30, but its shares were flat, 1.8p up at 282.3p.

There was better news from the pub sector after Chef & Brewer owner Punch Taverns reported a bigger-than-expected rise in second quarter sales.

Numis Securities increased its forecasts by 3% to reflect the improvement in the managed pub estate. Punch shares were 4p higher at 75p, a gain of 6%.